Base metals moved higher after early losses on Tuesday as a falling dollar supported the complex while better-than-expected retail sales in the United States eased concerns about a double-dip downturn. Benchmark copper on the London Metal Exchange moved into positive territory to finish at $7,660 a tonne versus Monday's $7,630 close.
The metal, used in power and construction is nearing four-month highs of $7,750 hit earlier this month. Nickel closed at a new four-month peak at $23,350, while tin closed at a two-year top at $22,650 per tonne. Both metals have been underpinned by a brightening picture for fourth-quarter demand, while tin has also been supported by supply constraints out of Indonesia, the world's top tin exporter.
"We had weakness this morning, so it's been a day of two halves," said analyst Stephen Briggs of BNP Paribas. "That turnaround is related to the dollar." The dollar sank to its cheapest in over a month against a basket of currencies while US equities pared losses and climbed into the plus column.
"We've had some impressive numbers from China and I think tightness in the copper supply side is going to put a natural floor to any potential correction," said Carl Firman, analyst at Virtual Metals, adding copper could test $8,000 a tonne in the fourth quarter. Demand prospects for the metal were bolstered on Monday by news that China's industrial production rose 13.9 percent year-on-year, rebounding after slowing to 13.4 percent in July. Falling copper inventories, currently at 390,525, also supported prices. Stocks have fallen from above 550,000 tonnes in February.
Also supporting markets, UK-based ETF Securities has established an account with LMEsword, the LME's electronic transfer system for stock warrants. That reignited talk over the potential launch of physically-backed base metal ETPs. Aluminium ended at $2,159 a tonne, up from $2,130 a tonne, while lead was untraded at the close but last bid at $2,242 a tonne versus $2,250. LME zinc finished at $2,175 from $2,148 a tonne.
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